For thirteen years, I worked for an amazing architect. When I started at the firm there was no billing policy at all. My job was to take care of the office. This included accounts receivable. I admit it took me a while to fully understand the flow of an architectural contract. The more I learned about it, the more I could apply that knowledge into making an effective billing policy.
My task was designing a billing system that would work and could be followed with each account. As the system was implemented, cash flow improved. This made everyone happier around the office!
I did not reinvent best business practices. Accounting systems have been successfully in place in many sizes of businesses. I just applied a lot of common sense, trained everyone that systems must be followed, and learned the particulars about how architectural work flows so that the billing system could follow that flow.
Profitability followed. I founded ARI and offer the same services described in How To Get Paid On Time Every Time as an outsourced AR Management Firm and collection agency.
The billing practices that will help you ensure success are quite simple but often not implemented. I have a client who was having severe cash flow problems in his business. He granted 30 day terms. When I went in to consult and help him fix the problems, I found that his billing secretary was sending out invoices at the time that they were due. By the time the mail got opened everyone was late. They then treated the due date like it was not serious and paid “whenever.”
Are you being paid “whenever?” Look at your bills and when they go out. Implement the following immediately:
- If the bill amount, services and due date are not so clear that a first grader could immediately understand all the items, change the format of your bill. Don’t be afraid of big fonts for amounts and due dates.
- Have a strict 48 hour policy and stick to it. If a client has 30 days to pay, mail a bill within 48 hours of the client incurring the debt or using the service, or monthly on contract jobs.
- Get personal. Have someone in your office write a note on every bill. (If this is impossible due to the number of bills get colored stickers with notes or speak with your printer about an automated solution.) “Thank you! Jill, extension 123.” This goes a long way. “Thanks to a great client.” Or “Make my day, send a check my way.”
These are simple but critical. Implement away.